Choice Equity Broking IPO report on Paradeep Phosphates
Fertilizer company Paradeep Phosphates Ltd. (PPL), is coming up with an IPO to raise around Rs. 1,500cr, which opens on 17th May and closes on 19th May 2022. The price band is Rs. 39 - 42 per share. • The Government of India as one of the promoter entities, is fully offloading its stake (19.55%) in the company. • The IPO is a combination of fresh issue and OFS portion. The company will not receive any proceeds from the OFS portion. Of the fresh issue net proceeds, Rs. 520cr will be used to partially fund the acquisition of Goa facility and another Rs. 300cr will be utilized for repayment/prepayment of the borrowings availed by the company.
Valuation and Outlook
At higher price band of Rs. 42, PPL is demanding an FY21 EV/Sales multiple of 0.7x, which is at significant discount to the peer average of 1.1x. Considering the above observations, we assign a “SUBSCRIBE” rating for the issue.
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